Purchase
Finance the acquisition of a rental property based primarily on the property’s rental income rather than traditional employment-income qualification.
DSCR LOANS. INVESTOR TO INVESTOR.
DSCR Loans
Rental Property Loans Based on the Property — Not Your Paycheck
Traditional mortgages spend a lot of time figuring out how much you make. DSCR financing focuses primarily on whether the rental property generates enough income to support the loan.
With the DSCR loans I offer, you won’t be asked for W-2s, pay stubs or personal tax returns to document your income.
START WITH THE PROPERTY’S NUMBERS
What Is a DSCR Loan?
DSCR stands for Debt Service Coverage Ratio. It compares a property’s qualifying rental income to its qualifying monthly housing payment.
- 1.0: Rental income equals the qualifying payment.
- Above 1.0: Rental income exceeds the qualifying payment.
- Below 1.0: Rental income doesn’t fully cover the qualifying payment.
A 1.0 DSCR is a useful general benchmark, although programs may be available below 1.0 depending on the overall scenario.
Exact DSCR calculations and qualifying expenses vary by lender and loan program. The qualifying housing payment generally includes principal, interest, taxes and insurance, plus applicable association dues. DSCR is not the same as your full operating cash flow.
A SIMPLE EXAMPLE
$2,000Qualifying Monthly Rent
$1,800Qualifying Monthly Housing Payment
Equals1.11DSCR
The qualifying rental income is about 11% higher than the qualifying housing payment.
PURCHASE. REFINANCE. PUT EQUITY TO WORK.
What Can You Use a DSCR Loan For?
Rate-and-Term Refinance
Replace existing financing with long-term rental-property financing. Some programs may allow up to 80% LTV depending on the borrower, property and program.
Cash-Out Refinance
Access equity in an existing rental property. Cash-out is commonly available up to 75% LTV, with some programs potentially allowing 80%.
BUILT FOR THE WAY INVESTORS BUILD
Built for the BRRRR
You bought the property. You renovated it. You increased the rent and value. Now you want your money back so you can do it again.
REFINANCE MY RENTALA DSCR refinance can replace acquisition or renovation financing with long-term rental debt while potentially allowing you to recover some or all of the capital invested in the property.
- Buy
- Rehab
- Rent
- Refinance
- Repeat
Seasoning requirements, the appraisal, qualifying rent and the loan program can affect the timing and how much capital you recover.
GENERAL GUIDELINES. MULTIPLE LENDERS.
What Does It Take to Qualify?
I work with multiple DSCR lenders, so there isn’t one rigid qualification box.
660+Credit: A 660+ score generally opens a good range of DSCR options.
1.0 DSCRDSCR: A good general target, although programs may be available below 1.0.
Up to 80%Rate-and-Term Refinance: Programs may allow up to 80% LTV.
Commonly 75%Cash-Out Refinance: 75% LTV is common, with some programs potentially allowing 80%.
Property type, loan amount, reserves, investor experience, credit and other factors can affect available options.
Don’t Fit Perfectly Into the Box?
Send me the deal anyway.
A scenario that doesn’t work with one DSCR lender may work with another.
FINANCING THAT UNDERSTANDS INVESTORS
Why Investors Use DSCR Loans
For investors with complicated tax returns — or CPAs who are very good at making taxable income disappear — that can be a pretty nice feature.
- No traditional employment-income qualification
- No W-2s, pay stubs or personal tax returns to document income
- Ability to scale a rental portfolio without repeatedly qualifying based on employment income
- Potential to access equity through cash-out refinancing
- Long-term fixed-rate financing options depending on program
- Many programs allow borrowing through an LLC
WHAT DOCUMENTS WILL I NEED?
Probably Less Than You’re Used To.
No, I don’t need your firstborn child.
With the DSCR loans I offer, you won’t be asked for W-2s, pay stubs or personal tax returns to document your income.
I’ll tell you exactly what we need for your loan rather than sending you a 37-item checklist and making you figure it out yourself.
The deal still needs a file.
Depending on the lender and transaction, documentation can include:
- Identification and entity documents, if applicable
- Insurance and property information
- Leases or rental-income documentation
- Proof of funds or reserves
- An appraisal
These documents belong in the formal loan process. The initial Get a Quote form only asks for basic deal information.
FROM THE FIRST NUMBERS TO THE FINISH LINE
How It Works
- 01
Run the Numbers
Send me the property, estimated value, rent, current loan balance if applicable, approximate credit and what you’re trying to accomplish.
- 02
Review the Options
I’ll compare the DSCR programs available for the scenario.
- 03
Choose the Loan
We’ll look at loan amount, rate, payment, costs, prepayment terms and the overall structure.
- 04
Appraisal & Underwriting
I’ll help keep the process moving and communicate what is needed along the way.
- 05
Closing
We get the loan across the finish line.
Already have a Loan Estimate or quote from another lender?
Send it to me. I’m happy to look at it with you.
josh@mihlending.comLOOK AT THE WHOLE LOAN
Prepayment Penalties: Know What You’re Signing
Many DSCR loans include prepayment penalties. Their structure, duration and cost can vary by program, so it’s important to understand what happens if you sell or refinance early.
I walk investors through the entire structure rather than focusing solely on the advertised interest rate. We’ll consider prepayment terms alongside the payment, costs and your plan for the property.
The lowest interest rate isn’t automatically the best loan.
LET’S RUN THE NUMBERS
Not Sure If Your Deal Works?
That’s what I’m here for.
You bring me the deal. I’ll help you figure out the financing.
Loan programs, rates, terms and guidelines vary by lender and borrower qualifications. Examples are general information, not a commitment to lend. All loans are subject to underwriting, appraisal and program eligibility.